Shine comes off for sales of jewellery
Jewellery sales are set to lose their sheen this Ramadan as the soaring price of gold and the timing of the holy month deters shoppers.
The UAE's major jewellers are running muted marketing campaigns as many expect sales growth to fall by as much as 50 per cent compared with monthly figures so far this year.
"The movement in gold and diamond prices have been so volatile it has practically become almost impossible for jewellery retailers to plan their new collection launches and prices ahead," said Karim Merchant, the chief executive and managing director of Pure Gold Jewellers.
Viewed as an investment haven, gold has risen rapidly in the past year as sovereign debt worries, political unrest and a slowing Chinese economy have dominated investor behaviour. The metal is up more than 20 per cent so far this year and nearly 40 per cent over the past year.
"If [gold] remains volatile then it might confuse the customers' decision to purchase now and there are chances they may postpone their purchases for a later date," said Mr Merchant.
Pure Gold has 100 stores across the Middle East and India and has launched three special edition designer pendants for Ramadan.
The holy month is usually a major period for promotions as Muslims buy gifts for family and friends ahead of the Eid celebration.
Although retailers still expect to see growth in sales this year during Ramadan because of greater consumer confidence, jewellers do not expect the stellar growth of the year so far to continue. An influx of tourists from around the region, China and Europe has helped to boost sales this year.
Pure Gold said diamond jewellery sales rose 20 per cent during this year's Dubai Summer Surprises festival compared with last year's.
"DSS certainly contributed to the increased footfall in our shops and also the high number of tourists from pan-Arab and other countries," said Firoz Merchant, the company's chairman and founder.
However, retailers expect to suffer comparatively weak sales during Ramadan, particularly as many expatriates are out of the country during the school holidays.
The retailer Joyalukkas expects a sales increase of 10 per cent this year compared with Ramadan last year, but this is only half the rate of growth seen so far this year.
Chetan Dhakan, the owner of 10 stores throughout Dubai, including five in Dubai Mall's gold souq, said marketing and advertising was quiet among jewellers.
"There is not much marketing or anything specific about gold or jewellery. Advertising is mainly promoting the malls," he said. "Ramadan is definitely going to be slower this year, you can tell from the first few days. If the price stays this way, then it's going to be significant."
Biju Joy, the general manager for Dubai Gold & Jewellery Group, a trade body representing 700 jewellers, says a few retail trade members have introduced special Ramadan collections this year.
"Closer to Eid we expect an increase in demand," he said. "We always encourage our members to bring out new collections and best offers during Ramadan as it is a gifting time and there is a demand for gold and jewellery during the holy month."
Meanwhile, an executive at one of the UAE's most prominent electronics stores said he did not expect any uplift in sales during Ramadan.
"We anticipate sales to be flat this year or more or less similar to last year," said Ashish Panjabi, the chief operating officer at Jacky's Electronics.
Mr Panjabi blamed the timing of Ramadan for the slow season, and said consumers were more focused on shopping for groceries than electrical goods.
"Overall we have seen an improvement in sales over the previous year and expect this to be the case for the remainder of the year," he said.
"But during Ramadan, we have to be realistic in realising where priorities are for consumers. There are generally fewer tourists in the UAE during this period and given the fact that this year's Ramadan overlaps with the summer break, many expatriates are also away."
Berengere Luciani, the general manager of UAE retail operations at Allied Enterprises, which is part of the luxury retailer Chalhoub, agreed the timing of Ramadan would hit sales.
"Most of the tourists are gone … Additionally [expats families] are still away. Therefore we expect a slow pace of activity," she said.
However, while the beginning of Ramadan is usually "dead business", it is busier later in the month, said Ms Luciani.
Published: August 7, 2011 04:00 AM